Depreciation Calculator
Calculate how your asset's value decreases over time. Supports straight-line, declining balance, and sum-of-years-digits depreciation methods.
Results
Enter values and click Calculate to see results
How to Use This Depreciation Calculator
Enter the asset cost
Input the original purchase price of the asset. This is what you paid to acquire it.
Set salvage value and useful life
Salvage value is what the asset will be worth at the end of its useful life. Useful life is how many years you expect to use it.
Choose a depreciation method and calculate
Select straight-line, declining balance, or sum-of-years-digits. Click Calculate to see the annual depreciation schedule.
Depreciation Methods Compared
| Method | How It Works | Best For |
|---|---|---|
| Straight-Line | Equal depreciation each year | Buildings, furniture, general office equipment |
| Declining Balance | Higher depreciation in early years | Vehicles, computers, technology that becomes obsolete quickly |
| Sum-of-Years-Digits | Accelerated but less extreme than declining balance | Assets that lose value quickly but not as fast as tech |
Understanding Depreciation
Depreciation is how businesses spread the cost of an asset over its useful life. Instead of deducting the full cost in year one, you deduct a portion each year. This matches the expense to the revenue the asset helps generate.
Why Depreciation Matters
Depreciation affects your taxable income and book value. Higher depreciation means lower taxable income in the short term. It also shows how much of an asset's value has been "used up" on your balance sheet.
Salvage Value Explained
Salvage value (also called residual value or scrap value) is what you expect to get when you sell or dispose of the asset at the end of its useful life. A car might have a salvage value based on its expected trade-in value. A computer might have zero salvage value.
Useful Life Guidelines
The IRS publishes useful life guidelines in Publication 946. Common examples: computers and office equipment (5 years), vehicles (5 years), furniture and fixtures (7 years), residential rental property (27.5 years), commercial property (39 years). Your actual useful life may differ based on how you use the asset.
Common Useful Life Estimates
| Asset Type | Typical Useful Life | Common Method |
|---|---|---|
| Computers & Software | 3-5 years | Declining Balance |
| Office Furniture | 7-10 years | Straight-Line |
| Vehicles | 5-8 years | Declining Balance |
| Machinery | 10-15 years | Straight-Line or Sum-of-Years |
| Buildings (Commercial) | 39 years | Straight-Line |
| Buildings (Residential Rental) | 27.5 years | Straight-Line |
Note: These are general guidelines. Consult a tax professional for your specific situation.
Tips for Depreciation Planning
Consider Section 179 Deduction
For qualifying assets, you may be able to deduct the full cost in year one instead of depreciating over time. There are annual limits and phase-out thresholds.
Keep Detailed Records
Document purchase dates, costs, and when assets are placed in service. The IRS requires this information for depreciation deductions.
Review Salvage Values Periodically
If an asset's expected salvage value changes significantly, you may need to adjust your depreciation calculations going forward.
Understand Bonus Depreciation
Bonus depreciation allows additional first-year depreciation for qualifying property. Rules change frequently, so check current tax law.
Frequently Asked Questions
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